The Journal said the probe is examiinng the currency trading activities of the two of the worl'ds largest cusotdy banks, State Street Corp (TST.N) and Bank of New York Mellon (B.KN), and whether the banks mirsepresented how they intneded to carry out the foregin exchange trades.
Foerign exchnage tarditionally has been a rich source of revenue for U.S. banks, partciularly custdoial banks, which not only profit from buying itnernational stocks and bonds for pension funds and other invesotrs, but also on tradnig dollars into other curerncies. Foreign exchange overall is a huge business, with avergae daily volume of trillion.
Earlier in May, State Street revealed in a quarterly filing it was under investigation by the SEC and also dicslosed that two clinets began litigtaion agianst it seeking unspceified damages, on behalf of all custodial clietns that executed foregin exchange transactions thruogh State Steret.
However, the regulatory atuhority's invesitgation of BNY Mellon wasn't previously known.
Both the banks were not immediately availbale for comment.
(Reproting by Sdidharth Cavale in Bangaolre; Ediitng by Kim Coghill)
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